The euro rose against a broadly lower dollar after the European Central Bank held rates, as expected, while signaling it is leaning toward a June hike and as intervention by Japanese authorities lifted the yen.
Japan intervened for the first time in nearly two years, sources said, lifting the yen to a near two-month high versus the dollar as speculative shorts exited. The yen rise followed stern warnings from key Japanese officials that decisive FX action was nearing. European Central Bank President Christine Lagarde said euro-zone momentum has been hit by recent turbulence, leaving growth risks tilted to the downside, while inflation risks remain skewed higher. The Bank of England MPC voted 8–1 to hold rates, with Chief Economist Hew Pill dissenting for a hike to 4% amid uncertainty over Iran-related economic fallout. Oil eased after spiking above $126 on fears the U.S.-Iran conflict could disrupt Middle East supply, with U.S. military leaders set to brief President Donald Trump on potential military action against Iran. Iran warned it would launch “long and painful” strikes on U.S. positions if attacks resume and reaffirmed control of the Strait of Hormuz. Supply-side measures ease crude pressure with the U.S. possibly is pushing a coalition to secure maritime flows and plans to loan barrels from the U.S. reserves.
EUR/USD was lifted mainly by yen-driven dollar selling, but remains range-bound as the rebound from the 200-DMA stalls below 1.1754, leaving the tone neutral unless that hurdle breaks.
USD/JPY rebounded after reported Japan intervention drove it to a 155.50 two-month low, with improved risk sentiment helping the pair consolidate in a 156.00–157.83 cloud, though bears retain control below an upper Bollinger and key resistance near 158.
GBP/USD rose to a two-month high above 1.36, buoyed by broad dollar weakness tied to Japan FX action and the BoE’s hawkish hold.
AUD/USD firmed toward 0.72 as JPY-driven dollar selling and expectations of an RBA hike on May 5 kept the bullish structure intact, with a break potentially opening the way to 0.7222 and dips toward 0.7100–15 seen as buying opportunities.
Treasury yields eased as much as 5 basis points as the curve steepened. The 2s-10s yield spread rose 2 basis points to 50.4bp.
The S&P 500 was trading 1% higher following upbeat earnings and U.S. data.
WTI crude oil fell about 1.4%.
Gold rose 1.7% while copper was up 1.3%.
Heading toward the close: EUR/USD +0.52%, USD/JPY -2.47%, GBP/USD +0.96%, AUD/USD +1.17%, DXY -0.93%, EUR/JPY -2.00%, GBP/JPY -1.57%, AUD/JPY -1.38%.(Robert Fullem)
